Bitcoin Halving 2024: Grayscale Points Factors behind Price Surge
[TL; DR]
The United States SEC approval of spot Bitcoin ETFs has led to an increase in inflows into the bitcoin market.
The bitcoin ordinals transaction fees will contribute much to the BTC miners’ revenue.
The bitcoin halving event will occur between 19 and 21 April 2024.
Introduction
The general bitcoin market sentiment is that the BTC price will likely rise in 2024 due to several factors that include the halving event, inflows into Bitcoin ETFs as well as the resurgence of on-chain activity. Today, we shall analyze the factors that may have a great impact on the Bitcoin price this year.
Bitcoin Shows Robust Pre-halving Indicators
The latest onchain data shows that there are less than 10,000 blocks before the next bitcoin halving which will occur within the third week of April. Nonetheless, the market has not yet pinpointed the exact date, although it should occur between 19 and 21 of April. As we know, this year’s halving event will reduce the miners’ reward per block to 3.125 BTC.
A recent Grayscale survey indicates some key factors that will influence bitcoin price this year. The research reviewed that positive market structure updates, introduction of ordinal inions and fundamental onchain activity will make this year’s bitcoin halving event different from the previous ones. The report also highlights the challenges the miners may face after the halving event.
The United States approval of BTC ETF applications opened the door for fresh inflows into the bitcoin market. Since the beginning of February bitcoin ETF issuers purchased around 4,000 BTC per day which helped to reduce its supply in the market.
At the same time, the ETFs help to absorb the selling pressure which alters the market dynamics towards a more stable bitcoin price than before. Michael Zhao, a researcher at Grayscale, indicates that the bitcoin ETFs have introduced a new and steady demand for the cryptocurrency.
Related article: Grayscale: The Bitcoin halving in 2024 could fundamentally change the market structure.
Regarding the changes in the bitcoin market dynamics Zhao said, “As we get closer to the 2024 halving, Bitcoin is not just surviving; it’s evolving.”
On the other hand, the daily BTC issuance during the post-halving period will be 450, falling from the current rate of 900 BTC per day. The increase in demand for BTC and the fall in its supply will likely push its price upwards.
Bitcoin Halving Impact: Miners Adapt with Ordinals to Sustain Revenues
The reduction in mining rewards through the halving event is likely to affect the miners in a significant way. Instead of the current rate of 6.25 BTC per block the miners will get 3.125 after the halving event. This will reduce their earnings in a remarkable manner.
However, the miners have implemented various measures to deal with the evolving challenges. For example, since the beginning of 2024 the miners have been diversifying their sources of income. Some are raising funds through equity, selling reserves and debt issuances.
In quarter 4 of 2023 some miners sold their bitcoin holdings to increase their liquidity. Concerning this, the Grayscale report notes, “While the scenario might seem dire, there’s evidence that miners have long been preparing for the financial repercussions of the halving.”
It added, “There was a noticeable trend of miners selling their Bitcoin holdings Onchain in Q4 2023, presumably building liquidity ahead of the reduction in block rewards.”
There is much hope despite the challenges the bitcoin miners face. Instead of relying much on mining rewards the rising volume of bitcoin ordinal transactions can generate much revenue for the miners.
Currently, there are more than 59 million bitcoin inions that have raked in over $200 million in transaction fees. In several cases the bitcoin ordinals transactions have generated over 20% of the miners’ revenue. The next graph summarizes the bitcoin fee structure for 2023.
Cumulative Transaction Fees – Grayscale
As The Graph denotes the ordinals transaction fees used to rise above $4,000 000 per day. By January this year the bitcoin ordinals cumulative transaction fees had risen above $200 million
This new source of bitcoin transactions fees will likely sustain the miners in the post-halving recovery period. In 2023 gas fees on the bitcoin blockchain spiked several times due to network congestion arising fromhigh ordinal inion transactions.
During the post halving period the competition for block space may increase leading to higher transaction fees that will benefit the miners. It is important to note that the miners may opt to increase the hashrate to benefit from the increased transaction fees rather than the mining rewards. In addition, the prospect of a post-halving bitcoin price surge creates hope for the miners as well.
Sustained Onchain Activity Growth
During 2023 there was a surge in the onchain activity on the bitcoin network due to the introduction of ordinal inions. This invention bolstered the interests of developers to come up with other innovations which have increased the level of activity on the blockchain.
Analysts predict that developers may become more active in 2024 than in 2023. The future developer activity, therefore, may lead to higher transaction fees on the network.
Bitcoin ETF Approval: Catalyst for Mainstream Adoption
The United States approval of spot bitcoin ETFs in January has brought a new era in the cryptocurrency sector as it has led to a high inflow of funds. The involvement of large traditional asset management firms like Fidelity and BlackRock in the provision of bitcoin products has created confidence in the market and has attracted more institutional investors into the sector.
Read also: After BTC ETFs approved, what’s the next narrative?
The participation of BlackRock and Fidelity, among other asset managers, has helped to validate cryptocurrencies as worthwhile investment assets. Also, that has been symbolic to the point of attracting institutional funds inflow into the bitcoin market which may drive the post halving price up.
Many institutions that were constrained by regulatory restrictions and those with preference for traditional investment assets can now invest in bitcoin ETFs, thereby indirectly resulting in financial inflows into the bitcoin market. As a result, the investors that are oriented towards traditional financial instruments may also buy BTC.
Conclusion
The halving event, inflows into Bitcoin ETFs and the resurgence of on-chain activity on the bitcoin blockchain are likely to result in bitcoin price surge in 2024.The approval of BTC ETFs in the United States have created confidence in bitcoin which may lead to greater adoption than before. Also, in the post-halving period transactions fees which ordinal inions generate may help to increase the miners’ revenue.
FAQs about Bitcoin Halving 2024
How does bitcoin halving impact bitcoin price?
The bitcoin halving, set for April 2024, will reduce the miners’ rewards from 6.25 BTC to 3.125 BTC which decreases its daily issuance from 900 BTC to 450 BTC. If the reduction in daily bitcoin issuance is accompanied by a rise in the demand for the coin its price will rise.
What is the target of bitcoin in 2024?
The market anticipates the price of bitcoin to fluctuate between $100,000 and $150,000 by the end of 2024. However, its pre-halving price may reach $50,000.
How much will bitcoin go up after the halving?
Analysts anticipate the price of bitcoin to fluctuate between $50,000 and $150,000 after the halving event. The expected drivers for the price rise include its greater adoption after the launch of BTC ETFs and supply shock resulting from the halving event.
How much will bitcoin be worth in 2025?
The bitcoin price may fluctuate between $150,000 and $200,000 in 2025. The increase in institutional investment in the asset and the impact of the 2024 halving event should push its price upwards.
What is the price prediction for the next bull run of bitcoin?
During the next bull run, expected to start in 2024, the bitcoin price may fluctuate between $175,000 and $200,000. The next bitcoin bull run is unique since it occurs after the introduction of bitcoin ordinals and spot bitcoin ETFs which can influence its price to rise remarkably.
